Definitions

International Marketing
Spring 2007
Adaptation approach
Management’s use of highly localized marketing programs in different country
markets.
Adopter Categories
In the adoption process developed by Everett Rogers, a typology of buyers at
different stages of the “adoption” or product life cycle. The categories are
innovators, early majority, late majority, and laggards.
Adoption Process
A model developed by Everett Rodgers that describes the “adoption” or purchase
decision process. The stages consist of awareness. Interest, evaluation, trial, and
adoption.
Advertising Appeal
The communications approach that relates to the motives of the target audience.
Aesthetics
A shared sense within a culture of what is beautiful as opposed to ugly and what
represents good taste as opposed to tastelessness.
Arbitration
A negotiation process between two or more parties to settle a dispute outside of
the court system.
Association of Southeast Asian Nations (ASEAN)
A trade bloc comprised of Brunei, Cambodia, Indonesia, Malaysia, Laos,
Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Attitude
In culture, a learned tendency to respond in a consistent way to a given object or
entity.
Balance of Payments
The record of all economic transactions between the residents of a country and the
rest of the world.
Barter
The least complex and oldest form of bilateral, non-monetized countertrade
consisting of a direct exchange of goods or services between two parties.
Behavioral Market Segmentation
The process of performing market segmentation utilizing user status, usage rate,
or some other measure of product consumption.
Belief
In culture, an organized pattern or knowledge that an individual holds to be true
about the world.
Benefit Segmentation
The process of segmenting markets on the basis of the benefits sought by buyers.
Big Emerging Markets (BEMs)
Countries that have experienced rapid economic growth and represent significant
marketing opportunities.
Big Idea
A concept that can serve as the basis for a memorable, effective advertising
message.
Bill of Exchange
A written order from one party directing a second party to pay to the order of a
third party.
Brand
A representation of a promise by a particular company about a particular product;
a complex bundle of images and experiences in the customer’s mind.
Brand Equity
The reflection of the brand’s value to a company as an intangible asset.
Brand Extensions
A strategy that uses an established brand name as an umbrella when entering new
businesses or developing new product lines that represent new categories to the
company.
Brand Image
A single, but often complex, mental image about both the physical product and
the company that markets it.
Bribery
The corrupt business practice of demanding or offering some type of
consideration-typically cash payment-when negotiating a cross-border deal.
Call Option
The right to buy a specified amount of foreign currency at a fixed price, up to the
option’s expiration date.
Capital Account
In a country’s balance of payments, the record of all long-term direct investment,
portfolio investment, and other short- and long-term capital flows.
Cartel
A group of separate companies or countries that collectively set prices, control
output, or take other actions to maximize profits.
Centrally Planned Capitalism
An economic system characterized by command resource allocation and private
resource ownership.
Centrally Planned Socialism
An economic system characterized by command resource allocation and state
resource ownership.
Chaebol
In South Korea, a type of corporate alliance group composed of dozens of
companies and centered around a central bank or holding company and dominated
by a founding family.
Characteristics of Innovations
In Roger’s diffusion of innovation framework, five factors that affect the rate at
which a new product is accepted by buyers: relative advantage, compatibility,
complexity, divisibility, and communicability.
Cobranding
A variation on tiered branding in which two or more different company or product
brands are featured prominently on product packaging or in advertising.
Collaborating with Competitors
Seeking competitive advantage by utilizing know-how developed by other
companies.
Collaborative Agreements
Linkages between companies from different countries for the purpose of pursuing
common goals.
Collectivism
In Hofstede’s social values typology, the extent to which group cohesiveness and
harmony are emphasized in a culture. A shared concern for the well-being of all
members of society is also evident.
Combination Branding
A strategy in which a corporate name is combined with product brand name; also
called tiered or umbrella branding.
Common Law Country
A country in which the legal system relies on past judicial decisions (cases) to
resolve disputes.
Common Market
A preferential trade agreement that builds on the foundation of economic
integration provided by a free trade area and customs union.
Common Market of the South (Mercosur)
A customs union comprised of Argentina, Brazil, Paraguay, Uruguay, and Chile.
Comparability
The degree to which research results from different countries can be used to make
valid comparisons.
Competitive Advantage
The result of a match between a firm’s distinctive competencies and factors
critical for creating superior customer value in an industry.
Concentrated Global Marketing
The target market strategy that calls for creating a marketing mix to reach a niche
segment of global consumers.
Confiscation
Governmental seizure of a company’s assets with compensation.
Continuous Innovation
A product that is “new and improved” but requires little R&D expenditure to
develop and causes minimal disruption of existing consumption patterns and
requires the least amount of learning on the part of the buyers.
Contract Manufacturing
A licensing arrangement in which a global company provides technical
specifications to a subcontractor or local manufacturer.
Convenience Stores
A form of retail distribution that offers some of the same products as
supermarkets, but the merchandise mix is limited to high turnover convenience
products.
Copy
The words that are spoken or written communication elements in advertisements.
Copyright
The establishment of ownership of a written, recorded, performed, or filmed
creative word.
Corporate Advertising
Advertising that is not designed to directly stimulate demand for a specific
product. Image advertising and advocacy advertising are two types of corporate
advertising.
Cost-based Pricing
Pricing based on an analysis of internal costs (e.g., material, labor, etc.) and
external costs.
Cost-based Transfer Pricing
A transfer pricing policy that uses costs as a basis for setting prices in
intracorporate transfers.
Cost-plus Pricing
The price that results from adding the additional costs and expenses not directly
related to the manufacturing cost to the full-cost price.
Counterfeiting
The unauthorized coping and production of a product.
Country-of-origin Effect
Perceptions of, or attitudes toward, products or brands on the basis of the country
of origin or manufacture.
Creative Execution
In advertising, the way an appeal or selling proposition is presented. Creative
execution is the “how”, creative strategy is the “what”.
Current Account
A record of all recurring trade in merchandise and services, private gifts, and
public aid transactions between countries.
Customs Procedures
Procedures that are considered restrictive if they are administered in a way that
makes compliance difficult and expensive.
Customs Union
A preferential trade bloc whose members agree to seek a greater degree of
economic integration than is provided by a free trade agreement. In addition to
reducing tariffs and quotas, a customs union is characterized by a common
external tariff.
Demographic Segmentation
The process of segmenting markets on the basis of measurable characteristics
such as country income, population, age, or some other measure.
Devaluation
The decline in value of a currency relative to other currencies.
Developed Countries
Countries that can be assigned to the upper ranks of the low-income category, the
lower-middle income category, or the upper-middle-income category.
Differentiated global marketing
A strategy that calls for targeting two or more distinct market segments with
multiple marketing mix offerings.
Differentiation
In Porter’s generic strategies framework, one of four options for building
competitive advantage. Differentiation advantage is present when a firm serves a
broad market and its products are perceived as unique; this allows the firm to
charge premium prices compared with the competition.
Diffusion of Innovations
A framework developed by Everett Rogers to explain the way that new products
are adopted by a culture over time. Framework includes the 5-stage innovation
adoption process, characteristics of innovations, and innovation adopter
categories.
Discontinuous Innovation
A new product that, upon its success, creates new markets and new consumption
patterns.
Dumping
The sale of a product in an export market at a price lower than that normally
charged in the domestic market or country of origin.
Duties
Rate schedule; can sometimes be thought of as a tax that punishes individuals for
making choices of which their government disapprove.
Dynamically Continuous Innovation
An intermediate category of newness that is less disruptive and requires less
learning on the part of the consumers.
Economic Union
A highly evolved form of cross border economic integration involving reduced
tariffs and quotas; a common external tariff; reduced restrictions on the movement
of labor and capital; and the creation of unified economic policies and institutions
such as a central bank.
Economies of Scale
The decline in per-unit product costs as the absolute volume of production per
period increases.
80/20 Rule
In behavioral market segmentation, the rule of thumb that 20 percent of a
company’s products or customers account for 80 percent of revenues or profits.
Emotional Appeal
In advertising, an appeal intended to evoke a feeling response (as opposed to an
intellectual response) that will direct purchase behavior.
Environmental Sensitivity
A measure of the extent to which products must be adapted to the culture-specific
needs of different country markets. Generally, consumer products show a higher
degree of environmental sensitivity than industrial products.
EPRG Framework
A developmental framework for analyzing organizations in terms of four
successive management orientations: ethnocentric, polycentric, regiocentric, and
geocentric.
Equity Stake
Market entry strategy involving foreign direct investment for the purpose of
establishing partial ownership of a business.
Ethnocentric Orientation
The first level in the EPRG framework: the conscious or unconscious belief that
one’s home country is superior.
Ethnocentric Pricing
The practice of extending a product’s home-country price to all country markets.
Also known as extension pricing policy.
Expanded Triad
The dominant economic centers of the world: the Pacific region, North America,
and Europe.
Expatriate
An employee who is sent from his or her home country to work abroad.
Export Marketing
Exporting using the product offered in the home market as a starting point and
modifying it as needed to meet the preferences of international target markets.
Exporting
Selling or marketing goods or services to buyers located outside the home
country.
Expropriation
Governmental seizure of a company’s assets in exchange for compensation that is
generally lower than market value.
Extension Approach
Management’s use of domestic country marketing programs and strategies when
entering new country markets.
Femininity
In Hofstede’s social values framework, the extent to which the social roles of men
and women overlap in culture.
First-mover Advantage
Orthodox marketing wisdom suggesting that the first company to enter a country
market has the best chance of becoming the market leader.
Focus
The concentration of resources on a core business or competence.
Focused Differentiation
In Porter’s generic strategies framework, one of four options for building
competitive advantage. When a firm serves a small (niche) market and its
products are perceived as unique, the firm can charge premium prices.
Foreign Consumer Culture Positioning
A positioning strategy that seeks to differentiate a product, brand, or company by
associating it with its country or culture of origin.
Foreign Corrupt Practices Act (FCPA)
A law that makes it illegal for US corporations to bribe an official of a foreign
government or political party to obtain or retain business.
Foreign Direct Investment
The market entry strategy in which companies invest in or acquire plants,
equipment, or other assets outside the home country.
Forward Market
A mechanism for buying and selling currencies at a preset price for future
delivery.
Franchising
A contract between a parent company-franchisor and franchisee that allows the
franchisee to operate a business developed by the franchisor in return for a fee and
adherence to franchise-wide policies and practices.
Free Trade Area (FTA)
A preferential trading bloc whose members have signed a free trade agreement
(also abbreviated FTA) that entails reducing or eliminating tariffs and quotas.
General Agreement on Tariffs and Trade (GATT)
The organization established at the end of World War II to promote free trade;
also, the treaty signed by member nations.
Geocentric Orientation
The 4th level in the EPRG framework: the understanding that the company should
seek market opportunities throughout the world. Management also recognizes that
country markets may be characterized by both similarities and differences.
Geocentric Pricing
The practice of using both extension and adaptation pricing policies in different
country markets.
Global Advertising
An advertising message whose art, copy, headlines, photographs, tag lines, and
other elements have been developed expressly for their worldwide suitability.
Global Brand
A brand that has the same name and a similar image and positioning throughout
the world.
Global Company
A company exhibiting a geocentric orientation that pursues marketing
opportunities in all parts of the world using one of two strategies: either serving
world markets by exporting goods manufactured in the home country market or
by sourcing products from a variety of different countries with the primary goal of
serving the home county market. Global operations are integrated and
coordinated.
Global Competition
A success strategy in which a firm takes a global view of competition and sets
about maximizing profits worldwide, rather than on a country-by country basis.
Global Consumer Culture Positioning
A positioning strategy that seeks to differentiate a product, brand, or company as
a symbol of, or associated with, global culture or a global market segment.
Global Elite
A global market segment comprised of well-traveled, affluent consumers who
spend heavily on prestige or luxury products and brands that convey an image of
exclusivity.
Global Industry
An industry in which competitive advantage can be achieved by integrating and
leveraging operations on a worldwide scale.
Global Market Segmentation
The process of identifying specific segments of potential customers with
homogeneous attributes who are likely to exhibit similar buying behavior
irrespective of their country of residence.
Global Marketing
The commitment of organizational resources to pursuing global market
opportunities and responding to environmental threats in the global marketplace.
Global Marketing Strategy (GMS)
A firm’s blueprint for pursuing global market opportunities that addresses four
issues: whether a standardization approach will be concentrated in relatively few
countries or widely dispersed around the globe; guidelines for coordinating
marketing activities around the globe; and the scope of global market
participation.
Global Product
A product that satisfies the wants and needs of buyers in all parts of the world.
Global Strategic Partnerships (GSP)
A sophisticated market entry strategy via an alliance with one or more business
partners for the purpose of serving the global market.
Global Teens
A global market segment comprised of persons 12-19 whose purchase behavior is
shaped by shared interest in fashion, music, and youth lifestyles issues.
Gray Market Goods
Products that are exported from one country to another without authorization from
the trademark owner.
Gross National Product (GNP)
Value of all goods and services produced by a national. Exclude remittances (money
transferred by individuals who are employed overseas). Measure the size of an economy.
Gross National Product Per Capita (GNP/p)
GNP divided by size of the population. Measure the “richness of a market”
Gross National Income (GNI)
Value of all goods and services produced by a national including remittances (money
transferred by individuals who are employed overseas).
Gross National Income Per Capita (GNI/p)
GNI divided by size of the population. Measure the “richness of a market”
Group of Seven (G7)
Seven nations-the United States, Japan, Germany, France, Great Britain, Canada,
and Italy-whose representatives meet regularly to deal with global economic
issues.
Hedging
An investment made to protect a company from possible financial losses due
fluctuating currency exchange rates.
High-Context Culture
A culture in which a great deal of information and meaning resides in the context
of communication, including the background, associations, and basic values of the
communicators.
Hypermarket
A category of retail operations characterized by very large scale facilities that
combine elements of discount store, supermarket, and warehouse club
approaches.
Image Advertising
A type of corporate advertising that is used to inform the public about a major
event such as a name change, merger, etc.
Individualism
In Hofstede’s social values typology, the extent to which each member of society
is primarily concerned with his or her interests and those of the immediate family.
Innovation Adopter Categories
In Rogers’ diffusion of innovation framework, a way of classifying buyers in
terms of their receptivity to new products: innovators, early adopters, early
majority, late majority, laggards.
Innovation Adoption Process
In Rogers’ diffusion of innovation framework, a five-stage hierarchy that a person
goes through when deciding to buy a new product: awareness, interest, evaluation,
trial, and adoption.
Integrated Marketing Communications (IMC)
An approach to the promotion element of the marketing mix that values
coordination and integration of a company’s marketing communication strategy.
Intellectual Property Protection
The aspect of a country’s legal environment pertaining to patent, trademark, and
copyright protection.
Islamic Law
A legal system used in the Middle East that is based on a comprehensive code
known as the sharia.
Joint Venture
A market entry strategy in which two companies share ownership of a newly-
created business entity.
Jurisdiction
The aspect of a country’s legal environment that deals with court’s authority to
rule on particular types of controversies arising outside of a nation’s borders or
exercise power over individuals or entities from different countries.
Keiretsu
In Japan, an enterprise alliance consisting of businesses that are joined together in
mutually reinforcing ways.
Layers of Advantage
A strategy for creating competitive advantage by building a wide portfolio of
advantages.
Leas-developed Countries (LDCs)
Terminology adopted by the United Nations to refer to the fifty countries that
rank lowest in per capita GNP.
Letter of Credit (L/C)
A payment method in export/import in which a bank substitutes its
creditworthiness for that of the buyer.
Leverage
Some type of advantage-for example, experience transfers, leverage, or scale
economies-that a company enjoys by accumulating experience in multiple country
markets.
Licensing
A contractual market entry strategy whereby one company makes an asset
available to another company in exchange for royalties or some other form of
compensation.
Line Extension
A variation of an existing product such as a new flavor or new design.
Local Brand
A brand that is available in a single country market.
Local Consumer Culture Positioning
A positioning strategy that seeks to differentiate a product, brand, or company in
terms of its association with local culture, local production, or local consumption.
Localization (adaptation) Approach
The pursuit of global market opportunities using an adaptation strategy of
significant marketing mix variation in different countries.
Long-term Orientation (LTO)
The fifth dimension in Hofstede’s social values framework, LTO is a reflection of
a society’s concern with immediate gratification versus persistence and thrift over
the long term.
Loose Bricks
A strategy for creating competitive advantage by taking advantage ofa competitor
whose attention is narrowly focused on a market segment or geographic area to
the exclusion of others.
Low-context Culture
A culture in which messages and knowledge are more explicit and words carry
most of the information in communication.
Maastricht Treaty
The 1991 treaty that set the stage for the transition from the European monetary
system to an economic and monetary union.
Market Capitalism
An economic system characterized by market allocation of resources and private
resource ownership.
Market Entry Strategy
The manner in which company management decides to pursue market
opportunities outside the home country.
Market Expansion Strategy
The particular combination of product-market and geographic alternatives that
management chooses when expanding company operations outside the home
country.
Marketing Holding
A pricing strategy that allows management to maintain market share; prices are
adjusted up and down as competitive or economic conditions change.
Market Penetration
A pricing strategy that calls for setting price levels that are low enough to quickly
build market share.
Market Skimming
A pricing strategy designed to reach customers willing to pay a premium price for
a particular brand or for a specialized product.
Market Socialism
An economic system characterized by limited market resource allocation within
an overall environment of state ownership.
Marketing Mix
Product, price, place, and promotion-the four Ps.
Masculinity
In Hofstede’s social values framework, the extent to which a culture’s male
population is expected to be assertive, competitive, and concerned with material
success.
Most Favored Nation (MFN)
A privileged trading status in which a GATT signatory nation agrees to apply its
favorable tariff or lowest tariff rate to all nations that are also signatories to
GATT.
Multinational Company
A company that pursues market opportunities outside the home country market
via an adaptation strategy, i.e., different product, price, place, and/or promotion
strategy than used in the domestic market. In a typical multinational, country
managers are granted considerable autonomy; there is little integration or
coordination of marketing activities across different country markets.
Multisegment Targeting
A marketing strategy that entails targeting two or more distinct market segments
with multiple marketing mix offerings.
Nationalization
Broad transfer of industry management and ownership in a particular country
from the private sector to the government.
Newly Industrializing Economies (NIEs)
`A term used to refer to upper-middle-income countries with high rates of
economic growth.
Niche
A single segment of the global market.
Nontariff Barriers (NTBs)
Any restriction besides taxation that restricts or prevents the flow of goods across
borders, ranging from “buy local” campaigns to bureaucratic obstacles that make
it difficult for companies to gain access to some individual country and regional
markets.
North American Free Trade Agreement (NAFTA)
A free trade area encompassing Canada, the United States, and Mexico.
Organization for Economic Cooperation and Development (OECD)
A group of 30 nations that work together to aid in the development of economic
systems based on market capitalism and pluralistic democracy.
Outsourcing
Shifting jobs or work assignments to another company to cut costs. When the
work moves abroad to a low-wage country such as India or China, the term
“offshoring” is sometimes used.
Patent
A formal legal document that gives an inventor the exclusive right to make, use,
and sell an invention for a specified period of time.
Pattern Advertising
A communication strategy that calls for developing a basic panregional or global
concept for which copy, artwork, or other elements can be adapted as required for
individual country markets.
Penetration Pricing Policy
A pricing strategy of setting price levels that are low enough to quickly build
market share.
Political Risk
The risk of a change in political environment or government policy that would
adversely affect a company’s ability to operate effectively and profitably.
Polycentric Orientation
The second level in the EPRG framework: the view that each country in which a
company does business is unique. In global marketing, this orientation results in
high levels of marketing mix adaptation, often implemented by autonomous local
managers in each country market.
Polycentric Pricing
The practice of setting different price levels for a given product in different
country markets. Also known as adaptation pricing policy.
Positioning by Benefit
A positioning strategy that seeks to differentiate a company, product, or brand in
terms of one or more specific benefits (e.g., reliability) offered to buyers.
Positioning by Competition
A positioning strategy that seeks to differentiate a company, product, or brand by
comparing it.
Positioning by Quality/Price
A positioning strategy that seeks to differentiate a product, brand, or company in
terms expensiveness/exclusivity, acceptable quality/good value, etc.
Positioning by Use or User
A positioning strategy that seeks to differentiate a product by associating it with
users whose expertise or accomplishments are admired by potential buyers.
Power Distance
In Hofstede’s social values typology, the cultural dimension that reflects the
extent to which it is acceptable for power to be distributed unequally in a society.
Preferential Trading Agreement
A trade agreement between a relatively small number of signatory nations, often
on a regional or subregional basis. Such trade agreements can be characterized by
different levels of economic integration.
Price Escalation
The increase in an imported product’s price due to expenses associated with
transportation, currency fluctuations, etc.
Product Adaptation-Communication Extension Strategy
A strategy of extending, without change, the basic home-market communications
strategy while adapting the product to local use or preference conditions.
Product-Communications Adaptation
A dual-adaptation strategy that uses a combination of marketing conditions.
Product-Communication Extension
A strategy for pursuing opportunities outside the home market.
Product Differentiation
A product’s perceived uniqueness that can serve as a barrier to entry in an
industry.
Product Extension-Communications Adaptation Strategy
The strategy of marketing an identical product by adapting the marketing
communications program.
Psychographic Segmentation
The process of assigning people to market segments on the basis of their attitudes,
interests, opinions, and lifestyles.
Put Option
The right to sell a specified number of foreign currency units at a fixed price, up
to the option’s expiration date.
Rational Appeal
In advertising, an appeal to the target audience’s logic and intellect.
Regiocentric Orientation
The 3rd level in the EPRG framework: the view that specific regions of the world
are characterized by similarities as well as differences. In global marketing, a
regiocentric orientation is evident when a company develops an integrated
strategy for a particular geographic area.
Self-Reference Criterion (SRC)
The unconscious human tendency to interpret the world in terms of one’s own
cultural experience and values.
Selling Proposition
In advertising, the promise or claim that captures the reason for buying the
product or the benefit that product ownership confers.
Social Values Typology
A study by Dutch organizational anthropologist Geert Hofstede that classifies
national cultures according to 5 dimensions: individualism versus collectivism;
masculinity versus femininity; power distance; uncertainty avoidance; and long-
term orientation versus short-term orientation.
Sovereignty
A country’s supreme and independent political authority.
Standardized (extension) Approach
The pursuit of global market opportunity using an extension strategy of minimal
marketing mix variation in different countries.
Standardized Global Marketing
A target market strategy that calls for creating the same marketing mix for a broad
mass market of potential buyers.
Strategic Alliance
A partnership among two or more firms created to minimize risk while
maximizing leverage in the marketplace.
Strategic Intent
A competitive advantage framework developed by strategy experts Gary Hamel
and C. K. Prahalad.
Subculture
Within a culture, a small group of people with their own shared subset of
attitudes, beliefs, and values.
Tariffs
The rules, rate schedules (duties), and regulations of individual countries affecting
goods that are imported.
Tiered Branding
A strategy in which a corporate name is combined with product brand name; also
called combination or umbrella branding.
Trade Deficit
A negative number in the balance of payments showing that the value of a
country’s imports exceeds the value of its exports.
Trade Mission
A state- or federally sponsored show outside the home country organized around a
product, a group of products, an industry, or an activity at which company
personnel can learn about new markets as well as competitors.
Trade Show
A gathering of company representatives organized around a product, a group of
products, or an industry, at which company personnel can meet with prospective
customers and gather competitor intelligence.
Trade Surplus
A positive number in the balance of payments showing that the value of a
country’s exports exceeds the value of its imports.
Trademark
A distinctive mark, motto, device, or emblem that a manufacturer affixes to a
particular product or package to distinguish it from goods produced by other
manufacturers.
Triad
The 3 regions of Japan, Western Europe, and the United States, which represented
the dominant economic centers of the world.
Uncertainty Avoidance
In Hofstede’s social values framework, the extent to which members of a culture
are uncomfortable with unclear, ambiguous, or unstructured situations.
Value
A customer’s perception of a firm’s product or service offering in terms of the
ratio if benefits (product, place, promotion) relative to price. The ratio can be
represented by the value equation: V=B/P.
Value Chain
The various activities that a company performs-e.g., research and development,
manufacturing, marketing, physical distribution, and logistics-in order to create
value for customers.
Value Equation
V=B/P, where V stands for “perceived value”, B stands for “product, price, and
place,” and P stands for “price.”
Values
In culture, enduring beliefs or feeling that a specific mode of conduct is
personally or socially preferable to another mode of conduct.